discussion

mgmt_685_session_6.pptx

Strategic Functions and Functional Strategies

The 9-M Model

Chapter 4

WMW

Strategic Functions

Need for Integrated Model for Functional Strategies

Research shows that competitive advantage
Does NOT differ by business strategies of cost leadership vs. differentiation
DOES differ by consistency and match of selected business strategy with organization activities and processes
Use an integrated model of 9 functions for analysis, each represented by an ‘M’

Aligning Functional Strategies

Functional Strategies

Functional Strategies

Use Low commitment Approach	Use High commitment Approach
Recruitment of new employees based on their talent and experience	Attitude & cultural fit of new employees also important for teamwork & flexibility
Training focused on increasing on-the-job performance of the employees	Training oriented to help employees understand broader business context
Employee relations: workers satisfied enough to make routine contributions	Employee relations: Provide workers with autonomy, info, opportunity & authority to be self managing

2. Materials Function:
Supply Chain Strategy

Use Predictable Approach	Use Responsive Approach
Deliver functional products: daily use type	Develop innovative products: fashion, technology, or knowledge intensive
Supplier selection based on low cost	Supplier selection based on agility (a range of versatile capabilities)
Suppliers are asked to fit into the production planning	Suppliers are encouraged to become internal consultants

3. Marketing Function:
Customer Relationship Management Strategy

Use Utilitarian Approach	Use Interactive Approach
Focus on selling, delivering, & servicing a product aggressively	Focus on building repeat purchase loyalty & word of mouth popularity
“Pricing” is the primary 4P of marketing to increase market share, economies of scale, & capacity use	“Positioning” is the primary 4P of marketing to create an image of difference
Low-cost channels of distribution	Use service-intensive channels of distribution

Functional Strategies

4. Methods Function:
Knowledge Management Strategy

Use Specialized Approach	Use Generalized Approach
Technological followership – late movers	Technological leadership – early movers or any time revolutionizers
Process improvement without reinventing the wheel: use brainstorming, employee suggestions, licensing, & imitation	Obliterate & reengineer: use brain-stilling where employees, vendors, customers, & competitors are partners in innovation
Technology sourced pre-dominantly from outside, & through passive involvement of the firm	Technology developed pre-dominantly within the firm, or through active involvement of the firm

5. Machine Function:
Technology & Innovation Management Strategy

Use Process innovating Approach

Use Product innovating Approach

6. Monetary Function:
Investment Strategy

Use Budgetary Approach	Use Opportunity Approach
Benchmarking norms based on best practice, industry, or firm history	Rely more on human judgment in teams & coalitions of teams
Budgeting & discounted cash flow techniques for financial planning & performance monitoring	Strategic intent, vision, mission, & goals guide the planning & evaluation of objectives & actions
Short-term horizon for performance evaluation & control, using operating costs & other operating ratios	Long-term horizon for performance evaluation & control, using more qualitative measures

Functional Strategies

7. Manufacturing Function:
Operations Strategy

Use Asset-intensive Approach	Use Asset-light (service) Approach
Standardized parts, designs & products, created using sophisticated processes, technologies & tools	Customized parts, designs & products, created using simple craft-based processes, techniques & tools
Operations rely on machinery & on standardized procedures taught “Hamburger University” style	Operations rely on the intelligent use of machinery & problem solving
Company with walls & mechanistic organizational structures	Company without walls & organic structures that can be torn without disruption

8. Motivating Function:
Leadership Strategy

Use Transactional Approach	Use Transformational Approach
Reward/ Punishment for compliance with leader expectations	Inspirational: higher-order needs & motives
Directive: emphasis on procedures, norms, rules, controls, & directives	Participative: employee participation & involvement
Micro-leadership: seek those who are willing to carry the command	Super-leadership: seek empowered self leadership

9. Manipulating Function:
Stewardship Strategy

Use Private Approach	Use Social Approach
The goal of the firm is to make profits & to increase shareholder returns	The goal of the firm is to further its mission, continuously reviewed with the involvement of all constituencies
Shareholders give agency rights to the CEOs to manipulate everybody	CEOs are trustees, who are committed to sustainable development
Willing to compromise on values, if it adds to the bottom line	Willing to recognize new values, enabling stakeholder inclusiveness

Conclusions

Method for understanding functional competencies for differentiation and cost leadership
Identify 3–5 core activities in each of the 9 functions
Assess these activities on a scale of 1 (cost-containing) to (5) differentiation-augmenting.
If the average of the 9-M functions is low, then it suggests that the firm has cost leadership capability.
If the average is high, then the firm has a differentiation capability.